Ethical Issues in Insurance Marketing in India: The Policy Holders’ View

Ethics is a central problem in financial services industry, especially in life insurance where customers are uncertain about the long-term benefits of the product. The life insurance industry in India is currently facing an image problem. The number of complaints pertaining to Unfair Business Practices is increasing rapidly year on year basis. Keeping this in mind, this study was carried out with the broad objective of examining the policyholders' view regarding ethical issues in insurance marketing in India. The specific objectives aimed at identifying major ethical issues in insurance marketing corresponding to 7Ps of service marketing, finding out which "Ps" of service marketing are contributing the most to unethical behavior of life insurance companies in India and comparing public life insurer i.e. LIC with private insurers on ethical standards. A questionnaire based survey was carried out on a total number of 95 customers within Delhi region. A non-probabilistic convenience sampling method was used. The customers were asked to rate 38 ethical issues on a 5 point Likert Scale. The study found out that life insurance companies are not fair and transparent while marketing their policies to customers. According to 7Ps of marketing, Product, People and Promotion issues are the key ethical issues portrayed by policyholders of both LIC and private sector. Further, the study also identified nine unethical factors as perceived by policyholders using factor analysis. These factors mainly focus on company's fairness and transparency, professionalism, promotion and marketing policies. The results of the data from the study infer that there are serious ethical lapses on part of life insurers and customers are not satisfied on the ethical standards of life insurance companies.